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Id just like to give my own experience of encouraging children to compose. Ive recently
published a children's beginner method with coloured noteheads, based on a decade's research & observation of what has made my own pupils thrive. See http://colourmuse.com.
I have always encouraged children to 'compose' – by which I mean to work out a coherent piece that they can play in a consistent form, rather than just noodling around a few ever-varying motifs. When theyve achieved this I transcribe it into notation or, better yet, get them to play it into my computer via a MIDI kb, tho young ones usually
cant achieve the consistency of tempo to make that a worthwhile exercise.
Where the result is suitable I have incorporated them into ColourMuse. See http://colourmuse.com/Downloads/Book+1+Tunes+1%2B where all the tunes with a thumbnail picture contain child-composed tunes. If youre interested follow the View a Performance link to see the piece in question performed by a subsequent learner.
Now obviously Im not suggesting this is at all sophisticated, but that is precisely the point. The thing I have discovered from this is that what kids compose has a unique way of using their skillset that address others at the same stage in a way that adult-composed music never can. Subsequent learners find it very inspiring to play music that springs from the same mindset & musical 'probabilities'. It's like teenagers enjoying music written by their peers (which to adult ears often sounds gauche or banal) they find in it something which expresses their aspirations in a way that noone who does fall within their peer set can ever hope to achieve.
The advantage of ColourMuse for beginners is that it really does abolish music reading difficulties so that everyone gets off to a head start. http://uk.youtube.com/watch?v=GwK53xF4yKk is an example of a 6 yearold playing a piece by a 7 yearold!
Sincerely
MMS

That video is too cute!! Rock on little guy! I always encourage my piano students to compose too, but haven't found standard notation to be much trouble for them, so long as you can 'translate' it a bit. Well done, mmsteer! Teaching those kids to make their own music is a really important thing.